The New Zealand government is investigating the profitability of establishing a pumped hydroelectric power plant on the South Island. The project could provide up to 8.5 TWh of annual production and storage capacity to support the country’s transition to 100 percent renewable electricity generation.
The New Zealand government has confirmed it will develop a detailed business plan for a pumped hydro system at Lake Onslow as it seeks to build a “sustainable, affordable, secure and carbon-free energy system”.
Energy Minister Megan Woods said the Lake Onslow plant is central to New Zealand’s battery project, which has been set up to find out how best to solve the problem of dry years – when low rainfall limits existing hydropower supply – without fossil fuels.
“Until we address the dry year problem, we will continue to rely on burning expensive and polluting fossil fuels to generate electricity,” Woods said. “Pumped water is an ingenious way of storing energy in a large reservoir that is released into a lower reservoir when power is needed, like a giant battery.”
It is estimated that in the worst dry years, the energy deficit can be 3-5 TWh, which is about 10% of the country’s current annual energy demand.
The Lake Onslow pumped water system is expected to provide 3 to 8.5 TWh of annual production and storage capacity, depending on the extent of the expanded lake.
The studies of the first phase show that the construction of the project would take about seven to nine years.
“We always knew that any dry year battery storage solution would require a significant investment, so it’s important that we thoroughly test these scenarios and get them right,” Woods said. “Now more detailed work has been done, we have a much clearer picture of the estimated costs, which differ significantly from the high-level cost calculations of 2006. The next step is to dig even further before we look at spending such a huge amount of money, but one thing we know is that nothing is being done to plan for climate change.”
Woods said the government is also continuing to explore an alternative option that would include a mix of technologies, including burning biomass, geothermal energy and green hydrogen, as well as a smaller pumped water system in the central North Island. The alternative portfolio option would cost about $13.5 billion, Woods said, but would have much higher operating costs than the Lake Onslow pumped water project.
A detailed business model will probably be completed by the end of next year. It will take another two years to make the final investment decision.